The Game Ain't Changed, It's Just Gotten Downright Fierce

Category Archives: Used Games

So there’s reports floating around that the MS is saying that Xbox One will not charge a fee when you sell a game on.

Instead, what it seems to do is use the physical disc as a bit of a “key”. You pass the physical disc on, and the disc installs the game and then “activates” it on the Xbox One in question, deactivating it on systems elsewhere. I suppose you can “activate” elsewhere using Xbox Live, too; if you have it installed elsewhere and then log into your account, you’ll have the option to activate where you are and then deactivate elsewhere. Hence the “checking in” aspect; it needs to do that in order to make the system work.

Meanwhile, the system will give MS the ability to give publishers (and themselves) a cut of used games sales by big retailers, and (I suppose?) to allow for permanent ownership transfers from one person to another as a part of that. Gamestop et al will be able to get “reset codes”.

Do I like this? Not completely, but it’s sure-as-hell better than how it looked in Wired. This still plays hell with anybody with Internet connection problems, and still means that the console’s useless if the servers go down at some point in the future. If this is how the scheme works, though, then it DOES open up the possibility of digital resale of game licenses. That’s really, really overdue, even if publishers probably hate the idea. I still think it’ll be Steam that opens that door, not Microsoft.

Funny thing is, I still think the Wired article was right. This stinks of damage control. Microsoft knows that they’ve got a PR nightmare on their hands, and that the whole idea of leading off with the TVish stuff and putting the games on display at E3 was a TERRIBLE idea made worse by their decision not to even tease the E3 game roster. The presentation itself should have had lots of fun teasers for games that they’ll be revealing at E3, in order to keep the gamers onside while they rolled out all this set-top box nonsense.

They didn’t, and so gamers’ attention is caught up completely in this half-baked and clearly unfinished DRM scheme. I doubt MS has thought it through enough and I’m SURE that it isn’t finalized yet. The Wired version was probably where they were last week, and now they’re hurriedly revising things to make it less objectionable and even, dare I say it, consumer-friendly.

You know what? That’s a good thing. I like that. It shows that they’re paying attention. It shows that they’re listening. Everybody makes mistakes, especially MS. Where MS excels is in taking a flawed product and iterating on it until it’s good. Windows XP had a lot of problems out of the gate, and it wasn’t until the second or third service pack that it became the OS that people are loathe to give up. Vista was terrible, and it wasn’t until Windows 7 refined Vista that we learned that MS had actually built something really, really great. Iteration, iteration, iteration. It’s why I still think the Surface is going to be a huge deal in a hardware generation or two.

Consoles are no different. The first Xbox was a neat entrant, but it wasn’t until the 360 that they got it right, and the 360 itself had hardware issues until later revisions. Xbox One is an extension of the UI concepts that they’re using on the 360 and in Windows 8, and certainly the Kinect being heavily improved.

It’s when MS thinks that they’ll pull it off all in one go, that they’re an Apple that releases a polished product right out of the gate, that they screw up. They aren’t Apple, or Google, or Samsung. They’re MS. They’ve got inertia. They need to listen, learn, and improve. They do that, and the Xbox One might well become something worth owning.

Edit: Or maybe not? I’m re-reading that Harrison interview and it seems to suggest that you can’t just pass the disc on.

MS, let’s be straight on this. Allowing for store-mediated resale is not enough. If you don’t have a mechanism for users, actual users, to transfer ownership either permanently or temporarily, people are going to be pissed off beyond all reason. It’s perfectly fair to block people from playing games that they’ve lent or given to friends. Each purchase should mean only one user playing at a time. But blocking the ability to lend/sell/borrow/give at ALL is over the line.

Like this:

Had a fascinating exchange on Twitter with Dan Amrich, Community Manager for Activision. We were talking about the anti-used game stuff on the XBOX One (or XBone, if you prefer), and after I rebutted his point that people shouldn’t be haters by saying that it’s okay to hate terrible ideas, and gave the admittedly-hyperbolic example of dumping PCBs into public pools as a terrible idea that I feel free to hate, he busted out the “it’s only games” thing, quickly following it up by an exit featuring the “you’re mixing up games and politics. Good day sir.”

Mixing up games and politics.

Hah.

Dan, do you even know what politics IS?

Politics, dear Sir, is about the exercise of power. When I studied political science, that was pretty much the entire curriculum. What power is, who has it, how it’s used, where it’s used, and how it should be used. An entire field based on one concept.

So why is it an entire field of study that goes back thousands of years? Because power is everywhere. It’s all around us. Every day, in every way, in every action we take and every action we don’t take, we are exercising power and being subject to power. It can be as obvious as not taking a candy bar from a store out of the desire not to be punished by the state, or as subtle as the language we use in a casual conversation with friends. Sure, power affects who you vote for, but it also goes into the things you buy and sell and, yes, the enterrtainments you enjoy.

(Hence that whole “the personal is political” line. It’s not that everything reduces to power. It’s that power suffuses everything.)

Gaming is no exception to that. The entire field is rife with issues of power. The gender issues that everybody’s worrying over right now? Power. The all-consuming discourse over freedom of expression? Power. The concentration of economic power in the hands of a small number of publishing houses? Power. The move of the industry to the locations with the best subsidies for development? Power. The rise of free-to-play on mobile devices? Power.

But the whole resale thing on the XBOX One? The one that we were talking about? It’s more of a power issue than almost ANY of these, barring the gender and identity questions. It pits the power of the publisher and manufacturer against the power of consumers. It pits the publisher’s power of copyright ownership and the manufacturer’s powers of patent ownership against the consumers’ power of media ownership, as embodied in the first sale doctrine. Whoever has the least power may face bankruptcy, fines or even imprisonment.

Yes, most of these issues are discussed in terms of “rights”. Rights are about POWER. They’re recognized and endorsed entitlements, backed up by the state’s power to punish and the moral power granted to rights-holders in our society. You have rights? You have power. It may not be much, and it may not be enough, but it’s there.

So, no, Dan, there’s no distinction. Everything is political, and this is VERY political, because it’s a move by powerful publishers and distributors to curtail the (very small) amount of power still enjoyed by consumers.

Now, you could theoretically argue that it isn’t important. People do. Dan did, if unwittingly. But I think that you have to be consistent on that. If games don’t matter, if they aren’t important, then, yes, there’s no point granting consumers these powers. But that opens the question of whether and why their creators should enjoy the powers granted by copyright and patent laws, as well as freedom-of-expression laws like the Americans’ First Amendment.

If they DO matter–and this is where I stand–then their creators do deserve the power that come from the recognition of their rights, but consumers deserve the same thing. That includes resale, borrowing, rental, and all the rest.

And, yes, that includes the ones yelling on Twitter.

(Oh, one last thing. Power isn’t always gained or granted at the point of a gun. Moral power matters. Convincing people that you have a just cause in order to convince them to go along with what you want is often far easier and more effective than trying to use the state as a blunt instrument to punish the hell out of them.

(If you want people to respect your rights as a copyright holder, the first step is recognizing their rights in turn. That’s why resale isn’t “piracy”. Resale prevents piracy. Something to keep in mind.)

Okay, go read this piece in Ars-Technica from Kyle Ormand. It’s about how blocking the use of used games—a rumored feature on the next set of consoles—won’t be disastrous for console game. I disagree, obviously, but was interested in what he’d have to say. What I found was a fairly balanced piece, but I honestly couldn’t figure out why Ormand was concluding that these things wouldn’t be an issue, when what he’s actually saying adds up to “disaster”.

I’ll go to the first section and show you what I mean.

One thing many publishers and used-game opponents seem to minimize when arguing against game reselling is that the mere existence of an aftermarket for games helps support the demand for new games. After all, you’re much more likely to shell out $60 on a game the day it’s released if you know you can get $20 to $30 back if and when you plow through it in a week. Eliminate the sellback option, and that same new game becomes that much harder to sell to a significant part of the audience, lowering demand and sales (or, alternatively, forcing publishers to lower the asking price for new games).

On the other hand, in a world where used games simply don’t work on your console, some segment of the market would be forced to pay full price for titles that they would otherwise buy in the form of a cheaper used copy. This would in turn increase the amount of money going to publishers and developers, compared to a world where used games are siphoning off some of those direct profits.

It’s hard to know exactly how big these countervailing effects would be, but we can try to estimate. Using Gamestop’s annual used game sales revenues of $2 billion as a basis, Wedbush Morgan analyst Michael Pachter suggests that the retailer is paying out roughly $1 billion a year in store credit for used games. Most of that money is plowed right back into new game sales, which Pachter says could be “driving overall games sales up around five percent or more.” That sounds like a big chunk of the new game market’s nose to cut off just to spite the used market’s face.

“It’s impossible to know the balance, but the cannibalization of new game sales from used games is most definitely largely offset by the purchase of new games with used game credits,” Pachter told me.

This doesn’t read as “things will be fine”. It doesn’t even read as “things will be good”. Ormand correctly points out that the main (I’d argue only) reason why the current $60 price for new games is sustainable is because people aren’t actually paying that price. What they’re paying is that sixty dollars minus however much they get for selling it on to someone else. They’re paying a net price of $50 or $40 or whatever to get the opportunity to play the game new without the hassle of rental or buying used.

So let’s go back to basic economics. There are far more people who are going to be willing or able to pay $40 for a game that aren’t going to be willing or able to pay $60. There’s going to be a lot of people who aren’t willing or able to pay $40 for multiple games, too. If the price goes up to $60, they might buy one game, but they won’t buy others. That’s great if you’re the guy selling that one game, but it ain’t much comfort for the guy selling the others. That’s why Ormand and Pachter both correctly point out that used-game buyers helps prop up the new-game market. Maybe not for the CoDs of the world, but everybody ELSE benefits.

Ormand mentions there will be profits from people who will be forced to buy games new. I don’t buy it, and it feels like he doesn’t either. Any additional revenues from forcing people to buy the games new have to be balanced against the “no resale” effect. Most people’s threshold for game-buying isn’t going to be based on idle desire, but firm limits on their entertainment dollar. They can only spend so much!

Think about it. As important as games may be to you, as vital an element of culture as they may be, they STILL have to be balanced against your other needs and desires. You still need to pay for shelter, for food, for warmth, for electricity, transportation, clothing, and all the rest…and you’re still going to want to pay for access to other cultural products and services as well. Games compete with movies, television, music, theatre, and all the rest. All that babble about “movie prices mean games are a better value proposition!” aside—now nonsense with ubiquitous five-dollar VOD movie rentals—people aren’t going to completely blow these other things off for games.

No, there are LIMITS to what you’re able to spend on games, especially with the middle class withering on the vine. Getting rid of resale won’t change those limits, so it’s actually quite unlikely that revenues will increase. They might concentrate, as a smaller and smaller number of big-name franchises scoop up more and more of those single-game buyers, but not increase.

Ormand’s quite aware of this, I think. Most of that section—only one of several, but all fitting this pattern—talks about the downsides of losing resale, not the upsides. It’s not a bad piece, mind, but that’s why I was a bit baffled reading it. What this article’s really saying is that losing resale is going to have terrible effects on the industry and on gamers. So why make the article about how everything will be fine, when all the available information suggests that it’ll be anything but?